Walgreen Co. Agrees to Pay $3.5 Million to Settle Allegations Under the False Claims Act

United States Attorney Matthew D. Krueger announced today that Walgreen Co. (“Walgreens”) has agreed to pay $3.5 million to the United States and the State of Wisconsin to settle allegations that Walgreens violated the False Claims Act by submitting claims to Medicaid for stimulant medications without complying with Medicaid rules designed to ensure that stimulants are dispensed for appropriate medical treatment.

Walgreens operates retail pharmacies throughout Wisconsin. The Wisconsin Medicaid program will reimburse a pharmacy for dispensing certain stimulant medications only if the pharmacy first verifies with the prescribing physician that the physician prescribed the stimulant for medically appropriate treatment, such as treatment for attention deficient disorder. The False Claims Act prohibits a pharmacy from knowingly submitting claims for payment for medications in violation of Medicaid’s rules.

The United States and the State of Wisconsin allege that, from 2011 through 2014, Walgreens violated Wisconsin Medicaid rules by dispensing routinely stimulant medications to Wisconsin Medicaid beneficiaries without first verifying that the prescribing physician ordered the medication for medically appropriate treatment. The United States and the State of Wisconsin further allege that, by failing to verify that medications were prescribed for appropriate treatment, Walgreens dispensed and billed Wisconsin Medicaid for medically unnecessary medications.

“Pharmacies play an important gate-keeping role in the Medicaid program to ensure that the millions of dollars spent each year on prescription medications buy drugs that are medically necessary,” stated United States Attorney Krueger. “This settlement demonstrates that the Department of Justice will hold pharmacies accountable.”

“The dispensing of medications of any kind needs to be done following all protocols and with proper verification to ensure the medical necessity of the treatment,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General – Chicago Region. “This settlement includes an OIG Corporate Integrity Agreement that contains requirements, such as multi-site claims reviews to be conducted by an Independent Review Organization, that seek to aid adherence to Federal health care program rules. The OIG will continue to work with our federal, state and local partners to protect the health and safety of Medicaid patients and vital taxpayer dollars.”

“The Federal Bureau of Investigation prioritizes the protection of consumers and will continue to hold accountable healthcare providers who misuse the Medicaid program,” said FBI Special Agent-in-Charge Justin Tolomeo. “This $3.5 million settlement shows that violations of Medicaid rules have a significant impact on the healthcare industry and taxpayer funds.”

Although the U.S. Attorney’s Office generally is not issuing press releases during the current lapse in appropriations, this announcement is being made because the settlement falls under the same Corporate Integrity Agreement that was recently announced in relation to cases being settled in the Southern District of New York. See https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-2692-million-recovery-walgreens-two-civil-healthcare. The investigation resulted from whistleblower lawsuits filed under the qui tam provisions of the False Claims Act. Consequently, the whistleblowers will recover a share of the settlement amount. As part of the settlement, the United States, the State of Wisconsin, and the whistleblowers asked the district court to dismiss the qui tam complaint.

Assistant United States Attorney Michael Carter represented the government in this matter. The FBI, OIG, and the Wisconsin Department of Justice Medicaid Fraud Control & Elder Abuse Unit assisted in the investigation. The settlement agreement states allegations only; Walgreens does not admit liability for the allegations.